Blue Corporation, a manufacturing company, decided to develop anew line of merchandise. The project began in 2008. Blue had thefollowing expenses in connection with the project:

2008 2009

Salaries $300,000 $400,000

Materials 80,000 70,000

Insurance 10,000 15,000

Utilities 7,000 8,000

Cost of inspection of material

For qualitycontrol 4,000 4,000

Promotionexpenses 10,000 7,000

Advertising -0- 30,000

Equipmentdepreciation 10,000 12,000

Cost of marketsurvey 8,000 -0-

The new product will be introduced for sale beginning in July2010. Determine the amount of the deduction for research andexperimental expenditures for 2008, 2009 and 2010 if:

a. Blue Corporation elects to expense theresearch and experimental expenditures.

b. Blue Corporation elects to amortize theresearch and experimental expenditures over 60 months.